May 8 (Bloomberg) -- Denmark, which introduced bank bail-ins two years ago, would only join a European banking union if
it offers better taxpayer protection than its current set-up,
Economy Minister Margrethe Vestager said.

The union should give insurance against “taxpayers paying
to clean up banks and build a stronger and more stable banking
industry,” Vestager said today at a parliamentary committee
meeting which addressed next week’s gathering of European Union
finance chiefs in Brussels.

Central powers to handle failing banks are the second leg
of the EU’s banking union strategy, which EU leaders laid out
last year in an attempt to break the link between weak banks and
sovereign debt struggles. The project took on new urgency in the
aftermath of Cyprus bailout talks that culminated in forced
losses for unsecured depositors at that nation’s two largest
banks.

“We want to make the best possible decision, but we can’t
make the call before the proposal is done,” Vestager said in an
interview at the parliament in Copenhagen after the committee
meeting. “Still, the banking union will be good for Denmark,
regardless if we’re in or out, as another kind of banking
cooperation is needed.”

Danish banks have struggled to persuade investors they’re
as safe as their Swedish rivals after Denmark became the first
EU country to force losses on senior bank creditors within a
resolution framework. The 2011 failure of Amagerbanken A/S left
most banks in Denmark locked out of funding markets as creditors
shunned the nation’s bail-in legislation.

‘Already Familiar’

Vestager, who’s also Denmark’s deputy prime minister, said
last month the EU should press ahead with plans for a joint
mechanism to handle failing banks, rather than delay it as
Germany would like. European finance chiefs meet May 14 in
Brussels to discuss guidelines for national resolution plans.
These guidelines will later set the frame for the bloc’s banking
union, Vestager said.

“This is about putting in place the rules -- already
familiar to us in Denmark -- across Europe to protect taxpayers
from paying to salvage banks and hand the bill to shareholders
and unsecured bond owners,” she said.